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2 March, 10:40

Jarrell Company began the year with $112,000 in its Common Stock account and a debit balance in Retained Earnings of $20,000. During the year, the company earned net income of $43,000 and declared and paid $8,000 of dividends. In addition, the company sold additional common stock amounting to $35,000. Based on this information, what is the ending Retained Earnings?

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  1. 2 March, 14:17
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    Ending retained earnings = $15,000 Credit Balance

    Explanation:

    Opening balance of retained earnings = $20,000 Debit

    Net Income of the year = $43,000

    Dividend paid = $8,000

    Net Profit to be added to retained earnings = $43,000 - $8,000 = $35,000

    Closing balance of retained earnings = - $20,000 + $35,000 = $15,000 Credit Balance

    Note: The amount of sale of additional stock is invalid and not to be considered, as this will not lay any impact on retained earnings.

    Final Answer

    Ending retained earnings = $15,000 Credit Balance
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